JUDGEMENT

M.M.Dutt, J. - (1.)In this rule, the petitioner L. Madanlal (Aluminium) Pvt. Ltd. has challenged the legality of a notice dated November 14, 1975, issued by the ITO under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), for the assessment year 1972-73.
(2.)The petitioner carries on the business of manufacture of aluminium utensils. The petitioner filed its returns of income for the said assessment year 1972-73 before the respondent No. 1, the ITO, showing as income of Rs. 2,95,030. The said income was computed by the petitioner after deducting the actuarial or the discounted value of the amount of gratuity payable to its employees on their retirement under the gratuity scheme. The respondent No. 1 by his order dated January 18, 1973, passed under Section 143(3) of the Act, though assessed the total income of the petitioner at Rs. 3,09,690, yet he accepted the deduction of the actuarial value of the gratuity. Being aggrieved by the said order of the respondent No. 1, the petitioner preferred an appeal before the AAC. He disposed of the appeal by his order dated August 5, 1975, granting some relief to the petitioner. Thereafter, the impugned notice under Section 148 of the Act was served upon the petitioner by the respondent No. 1. It has been alleged in the said notice that the respondent No. 1 has reason to believe that the income chargeable to tax for the assessment year 1972-73 has escaped assessment within the meaning of Section 147 of the Act, and that he proposed to reassess the income that has so escaped assessment. By the said notice, the respondent No. 1 directed the petitioner to file a return in the prescribed form within thirty days of the date of service of the same upon the petitioner. The petitioner submitted a return under protest along with a letter dated November 29, 1975. In the said letter, it has been stated by the petitioner that the reopening of the assessment is unwarranted and uncalled for, that there was a full and true disclosure of all materials and relevant facts necessary for the said assessment year, and that there has been no escapement of income at all. By the said letter, the petitioner also requested the respondent No. 1 to disclose the alleged reasons and/or materials for the issue of the impugned notice under Section 148. At this stage, it may be stated that after the rule was issued, on December 16, 1975, the respondent No. 1 replied to the said letter of the petitioner, inter alia, as follows :
" At the time of original assessment provision for gratuity was allowed as deduction. Gratuity liability based on actuarial calculation was held to be a contingent liability by the Supreme Court in Bombay Dyeing and Manufacturing Co. Ltd.'s case [1974] 93 ITR 603. This being an information from external source your case falls under Section 147(b) of the J.T. Act. Notice under Section 148 of the I.T. Act, 1961, has, therefore, been issued accordingly. "

(3.)Under Section 147(b), the ITO may reopen the assessment if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. It is the case of the petitioner that at the time the respondent No. 1 issued the impugned notice under Section 148 he had no information in his possession or any material from which such information could be derived, and consequently he had no reason to believe that income chargeable to tax had escaped assessment for the assessment year 1972-73, Mr. Pal, learned advocate appearing on behalf of the respondents, has produced before me the records of the case. It appears that on November 14, 1975, the respondent No. 1 recorded as follows : " I am satisfied that income has escaped assessment. Issue notice under Section 148. "
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